Options Trading News

Bullish sentiment reigns in various trades in Teva Pharmaceuticals today as shares hit new highs.

A call spread started the action as a trader sold 3,570 March 46 calls for $5 against open interest of 10,000 and, seconds later, bought 3,570 May 46 calls for the ask price of $6.15. The previous open interest there was just 38, so that was a new position.

This is almost certainly a roll of a long-call position out in time. In-the-money calls are used to reduce exposure to the time premium while having less capital exposure than buying the underlying stock.

Ten minutes later, we see action in the puts. A block of 3,439 June 52.50 puts were bought for the ask price of $4 against open interest of 3,451. Just after that, a block of 3,470 June 55 puts were sold for the bid price of $5.45.

This second trade appears to the roll of a short-put position further up in the money. In this case, the trader is looking for TEVA to be above $55 at expiration. (See our Education section)

TEVA is up 2.13 percent to $50.88 this morning after trading as high as $51.41. These are the drug developer's highest levels since February 2011.

The other Greeks (Gamma, Vega, and Theta) are calculated by using month and strike data, and not by individual option. These are called strike-based Greeks. Gamma, Theta, and Vega are all strike-based Greeks

optionMONSTER® provides stock market insight, advanced options education, and actionable trade ideas to meet the needs of do-it-yourself investors. After spending decades in the trading pits of Chicago, Jon 'DRJ' and Pete Najarian founded the company in 2005 to help people better manage their own investment portfolios.